HOMEWARES retailer Adairs has today released the details of its "disappointing" financial year, revealing net profit and EBITDA declines of 7.9 and 13.8 per cent respectively.
The company experienced a tough first half as its 1H17 EBIT dropped by $7.9 million due to "poor product ranging and disappointing retail execution".
While Adairs improved in the second half and overall sales were up by $17.5 million at the full year, it wasn't quite enough to offset the company's early performance amid a challenging retail market.
Adair's managing director and CEO Mark Ronan said FY17 was a "tale of two halves", however he was pleased that sales momentum increased by the fourth quarter.
"The first half of FY17 was a challenging period, as range issues in some product categories together with a softer than expected Christmas trading period impacting the performance of the business," said Ronan.
"Over the course of the second half of FY17 we successfully re-balanced our range, largely correcting the issues within some of our key product categories.
"The improvements in product together with our in-store and promotional execution saw us build sales momentum over the second half in a more challenging retail environment."
In the year ahead, Adairs will focus on developing processes that will grow its underlying business and manage execution risks.
Adairs is not the first listed company to have suffered at the hands of a tough Australian retail market.
Last week The Reject Shop (ASX: TRS) revealed that its profit margin had been hammered down 27.8 per cent and its shares took a 9 per cent hit during trade on Wednesday.
Topshop went into administration earlier in the year and exited Australia, leaving major shareholder Myer (ASX: MYR) in the lurch by $45.6 million as it was forced to write off the value of its stake.
Shares in fashion retailer Oroton (ASX: ORL) also plunged 20 per cent in a single day of trade in May.
Due to its dismal FY17 results, Citi analysts predicted Oroton would either need to sell off its brands to an overseas buyer or quit the ASX in order to survive.
Adairs has declared a total year fully franked dividend of 8 cents per share. During early trade, ADH shares spiked 6.2 per cent to trade at around $1.43 (as of 10:36am AEST).
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support